Alimony and the New Tax Law

A new tax bill was signed into law on December 22, 2017 that had many significant changes to how people and businesses will be taxed moving forward. In regard to family law, there was one significant change that eliminates a 75-year-old provision regarding alimony. But before we get into discussing this change, let’s start with defining what exactly alimony is.

Alimony is money paid by the supporting spouse to the dependent spouse allowing the dependent spouse to support oneself throughout the separation, as well as after the divorce is finalized. During the separation period, alimony is often referred to as post separation support (PSS). Once a final divorce decree is entered by the Court, post separation support becomes alimony. The same tax implications will apply, regardless of which term is used.

Currently, the supporting spouse can claim a deduction on alimony payments. The alimony payments received by the dependent spouse are viewed as income by the IRS and are therefore taxable. The IRS taxes the payments the same way they would tax salary or wages.

So, what did the new tax legislation change? In any divorce commenced after December 31, 2018, the supporting spouse can no longer claim a deduction from alimony payments made to the dependent spouse. Also, the dependent spouse receiving the alimony payments is no longer required to pay taxes on the alimony payments as if they were earned income.

These changes will certainly have an impact on separation agreement negotiations concerning alimony and post separation support. However, the new tax laws will not affect anyone who divorces or signs a separation agreement before 2019.

Family Law Explained

Family law is the branch of law which deals with all maters related to family unit and other domestic relations such as surrogacy and adoption, domestic partnerships, civil unions, marriage, divorce, child abduction, child abuse matters, child neglect, child maintenance, child adoption, paternity cases, child visitation rights, child custody, alimony, division of family property, etc.

All courts in the world have reported increase in family law as parties divorce, adopt children, contest paternity suits, etc.

According to family law lawyers, this branch of law is different from the other branches because it touches on sensitive private matters. Sometimes, the family lawyers act as counselors, mediators, conciliators, negotiators, etc. The courts that adjudicate on family law matters sometimes also act mediators as they try to reconcile members of the same family to solve their issues is amicably so as to preserve their relationship.

The substance of this type of law varies from one jurisdiction to the other because the principles that underpin it are largely borrowed from the society. For example, in societies where same sex relationships are not accepted, this kind of law requires that such union cannot be recognized as marriage in courts of law.

Like all the other branches of law, family law has undergone many transformations in an attempt to address the mediate issues in families. For instance, most societies have attempted to legalize ‘come we stay’ relationships if the parties involved live together for certain period of time.

One if the most popular modern trends in family law is the collaborative law which refers to structured process which provides parties seeking divorces or parties involved in other disputes an alternative names of resolving their dispute rather than a going through the costly, lengthy litigation process in courts. Collaborative law allows the parties to marriage or proposed civil union to take the control of their destiny by hiring family lawyers committed to the process of resolving disputes in family and relationships within family setting amicably through discussions and negotiations without the courts being involved.

The reason why modern family law discourages the parties from going to court is that courts decision have win-lose outlook. The court litigation is also complex, and as is the case with all matters of law is costly and may take long time to solve the matters.

In collaborative family law, disputes between family members can be settled amicably so as to ensure that their relationship as family is preserved. The collaborative family lawyers agree that they will not represent their respective parties in court litigation if either party decides to go to court. In the jurisdictions where is has been applied, collaborative family law has achieved good results in the amicable solution of family disputes. In some instances, it has successfully reconciled parties who would otherwise have divorced had the matter been decided by the courts.

Collaborative family law is not only advantageous in holding together families but also less stressful for the family lawyers. It ensures speedy, amicable resolution of disputes within the family.